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Tuesday, August 1, 2006

"Can't Imagine a Better Time" - One on One With Sikorsky's Jeff Pino

James T. McKenna

In his first interview as Sikorsky president, Jeff Pino shares his plans--and how he got into helos in the first place.

Jeff Pino was named president of Sikorsky Aircraft March 9 in a chain of events that saw his predecessor, Steve Finger, succeed Louis Chenevert as Pratt & Whitney president and Chenevert take that post and the CEO's slot at United Technologies Corp., the parent of both companies. Pino picked Rotor & Wing for his first interview as president, sharing with us how he got into helicopters in the first place, some of his plans and his assessment of the impact of a six-week Teamsters strike.

Congratulations again on the new job.

It's really exciting. If you were a guy like me and you had to place yourself into one of these companies at one time in a 20-year period, I just honestly can't imagine a better time to be placed right here. It's amazing.

What is it about this 20-year period that makes you say that?

Well, if you think about the legacy of Sikorsky in roughly that time . . . Gene Buckley and the team taking on the odds against replacing Bell and the Huey with the U.S. Army, and they did it with this wonderful aircraft called the Black Hawk, which we like to call the gift that keeps on giving. Every one of the U.S. armed services flies the airplane. Every one of them is buying more. We're on the M version of the Black Hawk, a new-build program.

You look at the U.S. Marine Corps, with the CH-53K, the future there. You look at the growth, you look at the expansion, and you look at the technologies that have allowed us to do things like the X-2 technology demonstrator. In a growth period? It's just a really a special time for the 10,000 people here at Sikorsky, and we're going to really take advantage of it.

Part of that is this United Technologies tie. This is a big, strong, financially sound corporation. That kind of strength lends to things like developing S-92s and making sure that growth and customer satisfaction are parts of what we do here, not just because we want to but because it's demanded by this really powerful, strong corporation. I'm just thrilled to have the chance to have some stewardship of it.

You've said you've been preparing for this all your life.

I guess I have said that. You know, it's funny. I didn't know I was preparing for it at the time. But, literally, I was a tank platoon leader in Germany, at a very cold tank range, where we were shooting gunnery. And Range Control called us up and said, "You got to shut down because we need a Cobra to fly and dump some ordnance."

So I shut down and we're in the tower, all of our guys went off to eat lunch or whatever, and this Cobra flies over and shoots rockets and shoots its, at the time it was a mini-gun, and 40mm grenade launcher. I was just looking up at that, and I said, "You know what? That's the way to go."

That was 1979. And, I mean, it's just been helicopters since that for me. Nothing else. It's been helicopters.

I went to flight school as a captain four years after I started, so I guess I was 25. I was lucky enough to fly in a couple of operational units, then to get involved with development test flying and project engineering at the Yuma Proving Ground. I met Bell Helicopter and had a wonderful 17 years there, doing both military program management and commercial sales program management. That led to senior vice president of the commercial business there, and then being recruited to Sikorsky. Yeah, you don't know it at the time, but in fact I've been preparing for this my whole life.

Did you think that you'd be taking the helm in the midst of the first strike at the company in 45 years?

There was quite a series of events that led to me having this job. They were very much oriented on Wall Street expectations. So Mr. Chenevert goes and takes that big job, Mr. Finger goes here. I was really, quite frankly, very surprised and literally knew 20 min. prior to the announcement--and that makes sense, given what else had to happen. When they asked me to take the job, I thought, "You mean right after the strike is over, or in two months." Mr. Chenevert said, "No, in 20 min." It was a bit of a surprise.

But, you know, I was on the management team here [as senior vice president for corporate strategy, marketing and commercial programs]. What I like to tell people is one person changed out of 10,000. Now, it's kind of the top of the org chart, but Steve Finger ran a pretty coherent and consensus management team, so it was not hard for UTC to make any of these decisions. Everybody just kind of moved and that power of the corporation, again, just keeps going.

What's your management style?

I tend to be very forward-leaning and future-oriented, with, I think, a pretty good capability to jump into the day-to-day details to make sure they're working right. I like to set up management processes that help me with day-to-day management in the first half hour of the day, so that I can focus on really this tremendous future that we have in front of us.

A lot of people know me from like a pretty strong sales and marketing background. But the fact of the matter is I've been an operational and a development test pilot, so I have those skills. The test pilot part also had a project-engineering piece. Although I'm not a rated engineer, I've been a project engineer on helicopters. Military program management and production in my first days at Bell led into commercial program management and profit-and-loss responsibility at Bell. So I have a pretty good feel, I think, for the total business, including the financial parts, which in our corporation is really a key to success. So, inclusive, forward-leaning and totally prepared to jump into the day-to-day at whatever detail I have to.

What is UTC expecting from you in terms of continuing its solid financial performance from Sikorsky's point of view?

I think the four focus areas are, first, continued growth, with appropriate financial returns. The second is a continued transformation of our business in this factory. The third thing is a real view that there's got to be something different and new in vertical flight. We see that as X-2 and its applications in a product sense, and we also see it as this overall concept, and I think we're leading the pack, in terms of fleet management, taking over fleet management from historically fleet managers like the military services, but even power-by-the-hour and fixed-wings and, you know, just aviation fleet management. So, changing the way flight happens by the product and by how it's managed once it's bought. The fourth is a real focus on globalization. If you look at the available dollars that you can compete for in the next 10 years, more of them exist outside our borders than inside our borders, and I think we have to prepare to win that business. Those are the four things that UTC looks at me to keep going here.

In terms of the international markets, what is at the top of the list and where do you see Sikorsky standing in some of those competitions?

Turkey and the Middle East are, right now, the largest single opportunity for us. With the U.S. government presence in the Middle East, and the Black Hawks that are so pervasive over there, it's really made an impact on local governments. So we're seeing a lot of activity out of the Middle East in terms of our Black Hawk fleets.

The S-92 stuff has clearly been established as probably the helicopter of choice offshore. But with recent decisions to take some of these historically military missions like search and rescue and move them to commercial operators, the -92 is well positioned there, and with the Canadian government and it's a strong competitor for combat search and rescue. An H version of a very simple -92 would fit military transport missions, which is the big open block--military transport.

What is the plan for the International Black Hawk?

If you line up transport helicopters by weight class over dollars, there's clearly a gap in a Black Hawk-sized helicopter at a price range that, you know, is under $12 million or some area like that, without being too specific. So we're working hard right now on finalizing an announcement of a Black Hawk that could fill that international niche. That would position the Mike model Black Hawk as sort of the high-end level. Something that was a little simpler and more pervasive we could position and then use that as a way to stir up international business in terms of how we might build it around the world. As we talk about globalization, that's clearly one of those strategies for that globalization--having the right products.

How do you feel you're doing versus the NH90 and the EH101 the new, improved Cougar that Eurocopter's pitching?

Boy, that's a big question. Internationally, the -92 has done very well against the 101. Since we've been flying the -92, I don't think we've lost any competitions. Of course, there haven't been any huge ones. It's more like the heads-of-state missions.

The CSAR-X decision will be a . . . I tell you, it will not be a fundamental decision for our continuation of the S-92, as a lot of people have speculated. Our S-92 is going to be accepted. It's a product. It's moving forward. But that's going to be a big decision, just generally speaking in terms of how those two products will compete.

The NH90 is a very capable helicopter. It will have a lot of military heritage as it gets delivered to France and Germany and Italy. But I tell you, I'm very excited about the Mike model Black Hawk, especially the Block 1 upgrade that we're on contract for. Now that's basically a fly-by-wire version of the Black Hawk M, with some other enhancements.

We've never competed with an actual aircraft against the NH90 [which is fly-by-wire]. We competed with a "paper" aircraft in Australia, and I think because they already flew the Eurocopter Tiger it was a pretty logical conclusion they went with the NH90 [which is built by Eurocopter and AgustaWestland].

So we'll see as we move forward. A lot of times we get our business [through the U.S. Foreign Military Sales program], which it's hard to say we competed. But I think in every case that we're going to sell these things FMS and that we sell Black Hawk FMS, I'm sure the country did an evaluation: Did it want an NH90 or a Black Hawk? When Saudi Arabia says, "I want 30 Black Hawks," I'm sure they considered NH90. You can't call it a win because there was no competition, but clearly you know there's a lot of evaluation that doesn't come out as competition.

So I think we're doing very well against the competition. Our FMS business is very strong.

The new Cougar, I haven't seen it yet in competition.

At the American Helicopter Society International's annual forum, you affirmed Sikorsky's commitment to X-2. What you've seen makes you feel, at least analytically, you've conquered some of the challenges?

We set key performance parameters clearly, mostly around the desire to hit 250 kt. Those translate down into technical performance measures like the amount of drag you could have to do that and the rotor separation and the integration between the engine and the two sets of lift-producing devices that we have on the aircraft. All I can say is that we are below, with a comfortable measure, flat-plate drag to hit that 250 kt. In this environment, with the counter-rotating props and the pusher in the back, that was the real science there. It's always been about drag. Engine power, weight--they're almost non-events. Weight is almost, once you get above a couple of 100 kt., weight is a non-event.

So the big issue at AHS last year was, "You guys will never solve the drag." All I was trying to affirm was that, analytically, we think we solved it. God's wind tunnel is the key.

You said at AHS that you'd gotten the drag on the rotor head down to about 25 percent of total drag?

What I said was, "Near conventional, single-rotor drag," and that will come out later as to exactly how we did that, but the credit needs to go to both Sikorsky and United Technologies Research Center, which helps all of the United Technologies divisions with this kind of science.

You'll see the fairing that's on there; you'll hear more about that at the end of the year, when we can really talk about it. But that's really got our drag down to almost conventional helicopter drag for the hubs, considering there's two hubs here.

You're ramping up all the production lines. What's the key challenge in meeting the projected growth in Sikorsky's production rates?

You've got to execute. So what we're doing is, because of this backlog of helicopters and the ramp-up that we're in right now, we're turning the Stratford facility into a real production facility in every sense of the word. If it's a one-off build, I don't want to do it here. So we're going to build L Black Hawks, M Black Hawks, [MH-60Ss and Rs for the U.S. Navy], -92s, -76s in one configuration in this factory. This factory is going to get on schedule and just be like a drumbeat.

All the one-off work, Keystone Helicopter will do the commercial work. The new Sikorsky Hawk Works @ Schweizer will do the military derivative work. We have West Palm Beach, which is our, probably a state-of-the-art flight test center in our business. That's how we're focusing the efforts. That's the only way to hit the production numbers that we're blessed with. We're going to get this place on a drumbeat.

We're 35-40 percent leaned and transformed here. But does that tell you about the runway we have. "Forward-leaning" is a kind way to say I'm an impatient guy. We've just got to get it done fast.

What is the thinking behind obtaining S-76 and S-92 production certificates for Keystone on the commercial side.

Well, listen, as a leader, you always want flexibility, right? When the strike hit, a couple of things happened. This facility has a military rating on it, and at any time the U.S. government can say, "Just build my stuff." So we thought, well, let's get some flexibility about having the ability to build the commercial products in other places. That seemed to make a lot of sense.

Couple that with the backlog that we have on the S-76s and the fact that we did have a two-month strike, to meet this year's production plans--we'll be pushing 40 S-76s alone--we're going to have to build some number of aircraft outside of Stratford.

So right now the plan is to build, oh, I think it's single-digit numbers at Keystone of S-76s and just see how that all works, and then make sure that we have the flexibility to make the decisions as we go in the future about where we build everything. We're moving up on Black Hawks. The -53, we've got to figure that one out. We've got the Canadian helicopters we've got to figure out. So it's nice to have some flexibility somewhere.

Would the thinking then be, on an ongoing basis, to run a handful of airplanes through final production at Keystone just to keep the line fresh, or would it simply be a surge facility?

That's a good question. Quite frankly, we're thinking of it now as a surge, but you've got to leave the door open that if you go through the effort of doing this, you might want to keep the learning going there with some number of airplanes. That's clearly not decided yet. Because I've got to tell you, with the amount of airplanes we're building and the customizing going on, and Keystone's other work, that's a pretty full facility as well right now, even with the new expansion there.

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